TRENTON, N.J.− In a ruling last month, the justices unanimously cited New Jersey law and regulations to establish a 3-part test employers must meet before they can use that “independent contractor” dodge to avoid paying Social Security and Medicare payroll taxes and workers’ comp – and to prevent workers from union organizing.

Millions of workers nationwide are misclassified as “independent contractors” and thus are unprotected by labor law, Social Security, Medicare and workers comp. Employers use those reduced costs to outbid colleagues for jobs and projects, by low-balling costs.

Misclassification is common in construction, trucking and a few other large industries. The California Supreme Court cracked down on misclassification in a case last July and a Boston law firm has been winning cases in Massachusetts against firms that misclassify a variety of groups of workers. Their latest case, now pending, involves taxi drivers.

And state Supreme Courts from Oregon to California to Kansas have ruled the nation’s largest package delivery firm – viciously anti-worker and anti-union FedEx – misclassifies drivers as “independent contractors” even though it controls virtually every aspect of their jobs.

The New Jersey case involved three truckers who challenged their misclassification by their employer, Sleepy’s.

The drivers “claimed Sleepy’s had misclassified them as independent contractors rather than employees and, in doing so, denied them the benefits and protections they otherwise would have been entitled to under New Jersey’s wage and hour laws,” a case summary says.

While a federal lower court ruled for Sleepy’s, the 3rd U.S. Circuit Court of Appeals in Philadelphia called for a new trial, and specifically asked the New Jersey Supreme Court “to consider the issue of which test should be applied to determine independent contractor status” because “there are at least four distinct employment tests that have been applied under New Jersey law in other contexts.”

The Jersey justices’ unanimous response set up the 3-part test for whether a worker in the Garden State is an “independent contractor:” Employers must now prove the worker “is free from the company’s control in performing the services, performs work outside the usual course of the company’s business or place of business and is engaged in an independently established business,” the justices said.

“Failure to satisfy any one of the three criteria results in an ‘employment misclassification,’” the New Jersey justices ruled.